Which of the Following Best Describes Average Cost Regulation of a Natural

question 83

Multiple Choice

Which of the following best describes average cost regulation of a natural monopoly?

• A) It necessitates a subsidy payment to the firm.
• B) It imposes a price that is less than marginal cost and less than marginal revenue.
• C) It creates incentives that tend to shift average total cost curves in an upward direction.
• D) It generates economic losses for the seller.

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Definitions:

Judge

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